Senate, House Republicans reach budget agreement with shutdown deadline nearing

PHOENIX — The Republican-led Arizona Senate and House reached an agreement on a 2025-2026 state budget Thursday night, just days ahead of a potential government shutdown.

House members passed the spending package with a large enough margin (40-16-4) to bypass a three-day deliberation timeline that would have required them to wait until Friday for a final vote.

The Senate is expected to pass it Friday morning and send it to Democratic Gov. Katie Hobbs’ desk. The deal is an amended version of the $17.6 billion bipartisan spending plan (Senate Bills 1735-1750) the Senate negotiated with Hobbs and passed last Friday.

The state budget needs to be signed before midnight Monday to prevent Arizona from experiencing its first government shutdown.

“We were able to reach a consensus to fund the core functions of government. I appreciate the collaboration with the House over the past few days to get this spending plan across the finish line,” Senate President Warren Petersen said in press release.

“We have delivered a balanced budget with bipartisan priorities funded, like K-12 schools, transportation, public safety and protecting our small businesses. We believe this is a bipartisan spending plan that will get signed.”

The plan includes the following allocations, according to the release:

• $92 million for new public safety investments.
• $119 million for new transportation initiatives.
• $281 million for new K-12 education funding.
• $29 million for new higher education funding.
• $182 million for new health and welfare funding.
• $12 million for new water investments.

Democrats tout state budget outcome

Twenty House Democrats voted for the proposal. House Minority Leader Oscar De Los Santos said that while it’s not a perfect plan, it covers many Democratic priorities.

“This is a budget that delivers for public school students, protects Medicaid and expands health care for indigenous tribal members and cancer patients. We also make big investments to bring down the cost of child care and make college tuition free for Arizona’s students from working families. And we held the line, providing no money for Trump’s mass deportation agenda,” De Los Santos said in a statement.

“Arizona voters sent a message that they want their leaders be adults and work together to address our most pressing issues – regardless of party. This is a budget that delivers on that mandate.” — Leader @RepODLS votes yes on a bipartisan budget that delivers multiple negotiated… pic.twitter.com/SPyU0xfhyv

— Arizona House Democrats (@AZHouseDems) June 27, 2025

Hobbs previously vetoed two budget plans put forward by House Republicans.

Petersen expressed his frustration with his GOP counterparts in the House on Thursday morning, hours before the state budget deal was reached.

“Let’s stop wasting people’s time. Let’s stop sending out mass confusion. Let’s get the work done and let’s wrap this up,” the Petersen told The Mike Broomhead Show.

Petersen said he’d been working with House leaders to minimize changes to the Senate state budget. He said they proposed nearly 20 revisions, but they had it down to few items heading into Thursday’s session.

“I’m optimistic we can wrap this up either today or tomorrow as far as a deal, and then you would vote out the next day and the Senate would quickly follow,” he said, prophetically, Thursday morning.

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